Those of you on Kos may not have heard too much about the Wisconsin Economic Development Corporation (WEDC), or even know too much about the level of disaster that Scott Walker's reign as governor of Wisconsin has been. But you should, as new evidence surfaced yesterday that illustrates just how corrupt and careless this guy's way of doing business is, and how that'll catch up to him once he formally enters the presidential race.
WEDC was one of the first items that Walker passed when he took office in 2011, and it replaced the state's Department of Commerce (and its civil servants) as the agency that was involved in economic development and tax incentives for businesses looking to expand or relocate to the state. The creation of WEDC was to create a "public-private" partnership" and create "flexibilities" in offering those incentives to companies, as part of Walker's plans to make Wisconsin "Open for Business."
If this sounds like an opening for corruption and mismanagement, you would be correct. WEDC immediately landed into trouble for having a revolving door of leadership and mismanagement of government funds, so much so that the U.S. Department of Housing and Urban Development in 2012 said it could not be allowed to handle its grants, so the oversight had to be shifted to another state agency. Then came an audit from the Legislative Audit Bureau in May 2013, and The Progressive's Ruth Conniff gives a nice summary of some of that reports many findings.
The WEDC was slapped by the feds last fall for losing track of millions of taxpayer dollars and failing to track its own loans to businesses, which likewise conveniently forgot to keep up their payments.
Now we learn that the job creators at the WEDC handed out money to companies that didn't create jobs. On four occasions, the agency gave out "incentives" to companies for the jobs they had created long before they got the awards.
You can't say the WEDC staff didn't have fun, though. The Audit Bureau reports that they used taxpayer dollars to buy Badgers tickets and iTunes gift cards and to pay for foreign trips for staff and their family members.
That's a trend that continues to this day, as WEDC staff has continued to accompany Walker on his many recent "trade trips" overseas
(including the one he's making to Israel next week),often at taxpayer expense.
It's also interesting to note that many of these WEDC "job creator" grants have gone to Scott Walker campaign contributors. As One Wisconsin Now showed in their excellent "W is for WEDC" report from May 2014.
Governor Walker’s campaign has received the benefit of over $2 million from WEDC recipients in either direct campaign donations or donations to the Republican Governors Association (RGA), which has spent heavily in support of his campaign. RGA spent $13 million for Gov. Walker in 2010 and 2012, and has already spent or committed $4 million in 2014. Overall, Walker received $1,023,546 from 192 WEDC recipients, and WEDC recipients donated an additional $1,088,256 to the Republican Governors Association.
At WEDC, these same Walker donors account for 30 percent of the recipients of economic development incentives, and they have received nearly 60 percent of the funding. Nearly one-third of WEDC’s total investment portfolio (190 recipients) were donors to Scott Walker’s campaign, either individually via employee(s) or as part of a management or ownership structure. Over one hundred of these recipients gave $1,000 or more to the Walker campaign.
In total, WEDC has awarded $974,659,130 through the end of 2013. Companies that donated to Governor Walker and/or RGA received a shocking $570,021,034 of that funding.
Lastly, it was revealed last year that
at least 2 companies that received WEDC tax credits not only were Walker contributors, but outsourced hundreds Wisconsin jobs to other countries after receiving WEDC's tax credits. WEDC Board CEO Scott Walker claimed that this type of outsourcing would never happen again in September 2014 (ahead of the November elections), and that new policies would be put into place. But the emptiness of Walker's promise was proven last week when Eaton Corporation (one of the two companies named in the 2014 story) announced a second round of outsourcing,
sending 93 Wisconsin jobs to Mexico despite receiving $370,000 in tax credits to expand in Wisconsin.
So flash forward to yesterday, and it became obvious that WEDC has done nothing to clean itself up, as the follow-up report from the Legislative Audit Bureau showed.
We examined WEDC’s administration of its grant and loan programs in FY 2013-14. Our file review found that WEDC’s contracts did not contain all statutorily required provisions. We assessed WEDC’s program administration based on the policies in effect when it decided to make awards and based on the policies in effect at contract execution. In both instances, we found that WEDC did not consistently comply with its policies. We also assessed WEDC’s management and oversight in FY 2013-14 of grant and loan contracts it had awarded in prior fiscal years. Our file review found that recipients contractually required to create or retain jobs were not contractually required to submit information, such as payroll records, showing that the jobs were actually created or retained.
For the loans it administers, WEDC collects loan repayments and pursues collection of delinquent loans. In 2014, the potentially uncollectible balance of loans with repayments 90 days or more past due decreased by $4.2 million largely because WEDC amended 13 loan contracts to defer loan repayments, wrote off 9 loans, and forgave 2 loans.
We examined WEDC’s administration of its tax credit programs in FY 2013-14. WEDC did not establish all statutorily required policies for these programs. WEDC did not consistently evaluate whether businesses met all eligibility requirements in its policies. We assessed WEDC’s program administration based on the statutes and policies in effect when it decided to make tax credit allocations and based on the statutes and policies in effect at contract execution. In both instances, we found that WEDC did not consistently comply with statutes and its policies. In addition, WEDC allocated tax credits for projects that began before contracts were executed.
We also assessed WEDC’s management and oversight in FY 2013-14 of tax credit contracts that it had awarded since it became fully operational in July 2011. Statutes require WEDC to annually verify information submitted by businesses on the extent to which contractually specified outcomes were achieved. Our file review found that recipients that were contractually required to create or retain jobs generally submitted lists of their employees and the wages of those employees to WEDC, which accepted this information as accurate. However, our file review found no documentation that WEDC attempted to verify the information before awarding tax credits.
Hey it's only the people's tax dollars, right? Who cares what happens to them once they're handed out, right WEDC? (You can read in greater detail
how much of a mess WEDC still is at this link.)
This capped off an already-bad week for Scott Walker and the Wisconsin GOP (updated estimates showed no added revenues will be coming in for the next two years, so the hated cuts in Walker's deficit-ridden budget will mostly have to stand),. This drove Scotty into full panic damage control mode, and he backed off his plans to merge WEDC with the Wisconsin Housing and Economic Development Authority (WHEDA). The whole idea of merging those two agencies screamed "corruption" from the start, since the handouts for Walker contributors that are a WEDC trademark could have been combined with development plans and other initiatives that WHEDA takes part in. Add in the fact that Walker just appointed former M&I/BMO Harris Bank exec and Walker megadonor Mark Hogan as the Chair of the WHEDA Board, and perhaps these guys realized that the whole exercise was drawing a whole lot of light to the sketchy ways WEDC and this Administration operates, so they're backing off this merger scheme....for now.
The lack of accountability, waste of taxpayer dollars and pay-to-play cronyism is a trademark of these types of organizations in many states, including IEDC in Indiana and Jobs Ohio, among many others that have copied the ALEC playbook of using taxpayer dollars as a means to kick back benefits to campaign contributors. As a former Hoosier, I saw this coming from miles away 3 years ago.
Sure makes you wonder if IEDC and Ms. Boykin had another investment in mind- a nice payoff to their well-connected buddies at the Indiana Statehouse, and a good "job creator" headline in the unsuspecting media. Regardless of whether anything actually happened and if it crowded out more legitimate businesses from growing.
So when you see the deceptions and cronyism that have wracked IEDC, and then you know that WEDC has already been afflicted with sketchiness and budget deficits in its short existence, you have a right not to trust either Daniels or Walker's plans. Then combine with the fact that Wisconsin lost more jobs than any other state last month, and you can see where WEDC and Walker staffers might be itchy on the trigger finger when it comes to making for a good photo op that costs us all a helluva lot more in the end.
After all, when you're Scott Walker and want to be like Indiana, why wouldn't you make backroom deals like the corrupt corporatist Hoosier you idolize, Mitch Daniels?
If anything, WEDC has been run even worse and has been more openly corrupt about being a means to pay back campaign donations than IEDC ever was. Funny how things in Walker World tend to work out that way.
It's well past time for Wisconsin Democrats and media to call WEDC what it is, and what it was always intended to be: A slush fund for Scott Walker's campaign contributors to get a nice taxpayer-funded kickback on their "investment."
WEDC's mess is a great example why in Wisconsin, it feels so much like America circa 2005-2006 right now. We all know the GOPs and the Dubya dimwit in charge has messed everything up, the tipping point of no return has been reached for Walker's approval (41% and falling), but it is maddening to see this state go down into the cesspool that's it current in. This tune is quite descriptive of how I frequently have felt over the last 15 years as corrupt, incompetent Republicans screw things up. I'm just tired of having to wait till things are FUBARed for us to be listened to.